TMTW #170 – 2014 Standard Mileage Rates

Posted on January 15, 2014 by taxblogger

Tax and Money Tip of the Week:
IRS Announces 2014 Mileage Rates
January 15, 2014 | No. 170

The 2014 standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes are:

-56 cents per mile for business purposes
-23.5 cents per mile for medical or moving purposes
-14 cents per mile driven in service of charitable organizations

The rate for business, medical and moving expense rates decrease one-half cent from the 2013 rates. The charitable mileage rate is set by statute.

The IRS determines the mileage rates based on an annual study of the costs of operating an automobile, including fuel prices, repair and maintenance costs, registration, etc.

Taxpayers always have the option of calculating the actual costs of using their vehicles rather than using the standard mileage rates.

However, you cannot use the standard mileage rates for business if you made the election to take a deprecation deduction in the year you placed the vehicle in service.

Regardless of which method you choose to deduct vehicle expenses, the IRS requires that you keep contemporaneous records to substantiate your deductions, like a mileage log. A properly maintained mileage log will contain such details as date and time, name and location of the destination and the purpose of the trip.

Stay safe while driving in 2014—and keep track of those miles!

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #169 – 2014 Due Dates

Posted on January 8, 2014 by taxblogger

Tax and Money Tip of the Week:
2014 Dues Dates |January 8, 2014 | No. 169

The IRS recently updated Publication 509 (http://www.irs.gov/pub/irs-pdf/p509.pdf) which lists all the filing due dates for 2014.

This publication contains three calendars: a General Tax Calendar, Employer’s Tax Calendar, and an Excise Tax Calendar.

You may want to take a look at this publication and update your calendar with all the due dates that pertain to you.

Don’t be late in 2014!

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW 168 – Happy Holidays! (taking a break from TMTW this week)

Posted on January 1, 2014 by taxblogger

Tax and Money Tip of the Week:
Happy Holidays (taking a break from
TMTW |January 1, 2014 | No. 168

We thank all of our clients and referral sources for their business this past year.

Hope everyone had a Merry Christmas/Happy Holiday and has a Happy New Year! 

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW 167 – This year is last year for NC 529 Plan Deduction

Posted on December 26, 2013 by taxblogger

Tax and Money Tip of the Week:
This Year is Last Year for NC 529 Plan
Deduction |December 25, 2013 | No. 167

From the December 18th Raleigh News & Observer, another item changing at the end of 2013 for North Carolina taxes…

Tax deduction for 529 plan expires soon

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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NC tax change highlights

Posted on December 18, 2013 by taxblogger

Tax and Money Tip of the Week:
NC Tax Change Highlights
December 18, 2013 | No. 166

From today’s Raleigh News & Observer, here are some highlights of upcoming changes to NC taxes…

Upcoming changes

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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New NC Tax Law and NC Form NC-4 (Withholding Allowances)

Posted on December 11, 2013 by taxblogger

Tax and Money Tip of the Week:
New NC Tax Law and NC Form NC-4
December 11, 2013 | No. 165

Form NC-4 (Withholding Allowances)

Lately, we have been fielding a lot of questions from clients concerning the completion of Form NC-4 for 2014.

The NC-4 is used by an employee to tell the payroll department how many allowances should be used to determine the amount of NC income tax that is to be withheld from an employee’s paycheck. Note that this form is for state withholding only – it does not impact the amount of your federal withholding.

With the new tax law dropping the 2014 individual tax rate to a flat 5.8% rate and many deductions being eliminated, employers have been are asking employees to complete new NC-4 forms for 2014.

In the past, the number of allowances was based on the number of dependents on your tax return.

For 2014, the number of allowances claimed is based on the amount of your NC itemized deductions, not the number of dependents. (Additionally, there is a new form (NC-4 EZ) that can be filed instead of the NC-4.)

If your employer has asked you to complete a new NC-4 for 2014, most employees can utilize the schedules on the face of Form NC-4 EZ to determine the number of allowances to claim.

If you have itemized deductions in the past and expect to do so in the future, you can use the schedules in the NC-4 instructions to calculate the number of allowances to claim and we are telling our clients to use the same number of allowances as they have used in the past to be conservative.

Remember, this form is only used to determine the amount of the NC withholding on your regular paychecks. If you claim to few allowances, you will get an NC refund when you file your 2014 return. But if you claim too many allowances, you will owe additional tax when you file your 2014 return!

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #164 – Estate Planning

Posted on December 4, 2013 by taxblogger

Tax and Money Tip of the Week:
Estate Planning
December 4, 2013 | No. 164

Key Estate Planning Documents You Need

This is a general, informational piece only and not intended to provide legal advice. Each individual should seek legal advice for their own situation.

There are five estate planning documents you may need, regardless of your age, health, or wealth:

1. Durable power of attorney
2. Advanced medical directives
3. Will
4. Letter of instruction
5. Living trust

Durable Power of Attorney
A durable power of attorney (DPOA) can help protect your property in the event you become physically unable or mentally incompetent to handle financial matters. A DPOA allows you to authorize someone else to act on your behalf, so he or she can do things like pay everyday expenses, collect benefits, watch over your investments and file taxes.

Advanced Medical Directives
Advanced medical directives let others know what medical treatment you would want, or allows someone to make medical decisions for you, in the event you can’t express your wishes yourself.

There are three types of advanced medical directives. First, a living will allows you to approve or decline certain types of medical care. Second, a durable power of attorney for health care (known as a health-care proxy in some states) allows you to appoint a representative to make medical decisions for you. Finally, a Do Not Resuscitate order (DNR) is a doctor’s order that tells medical personnel not to perform CPR if you go into cardiac arrest.

Will
A will is often said to be the cornerstone of any estate plan. The main purpose of a will is to disburse property to heirs after your death. Equally important, the will gives you the ability to name the executor who will manage and settle your estate and allows you to name a legal guardian for minor children or dependents with special needs. If you don’t leave a will, these items will be determined according to state law, which might not be what you want.

Letter of Instruction
A letter of instruction (also called a testamentary letter or side letter) is an informal non-legal document that generally accompanies your will and is used to express your personal thoughts and directions regarding what is in the will. Unlike your will, this document remains private and gives you the opportunity to say the things you would rather not make public. This can be the most helpful document you leave for your family members and your executor.

Living Trust
A living trust (also known as a revocable or inter vivos trust) is a separate legal entity you create to own property, such as your home or investments. The trust is called a living trust because it’s meant to function while you’re alive. You control the property in the trust, and whenever you wish, you can change the trust terms, transfer property in and out of the trust, or end the trust altogether.

As always, give us a call if you have any questions.

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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Happy Thanksgiving!

Posted on November 27, 2013 by taxblogger

Tax and Money Tip of the Week:
Happy Thanksgiving
November 27, 2013

There will not be a Tax and Money Tip of the Week this week.  We would just like to take the time to wish everyone a safe and happy Thanksgiving holiday!

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #163 – Year End Tax Planning

Posted on November 20, 2013 by taxblogger

Tax and Money Tip of the Week:
Year-End Tax Planning
November 20, 2013 | No. 163

This is the time of year in our CPA practice that I work with small business owners and individuals to perform tax checkups to help them project their tax liabilities for 2013 and make tax saving recommendations of moves they can make between now and year-end. Frequently, just defining the amount of taxes they owe via these planning services helps manage their cash flow so the businesses and individuals don’t have a big amount due and/or surprise each Spring when we prepare their tax returns.

For the business owner and individuals, one of the largest expenses can be taxes.  For this reason alone, this expenditure requires planning and monitoring as any other major expense.  A year end planning meeting with your CPA should include a discussion of:

  • any assets purchased during the year
  • anticipated year-end revenues and expenses
  • plans for current year retirement funding
  • any refinancing of debt that occurred in the current year
  • any changes to your business structure

This planning meeting should prepare the business owner or individuals to anticipate the amount of taxes that will be owed on March 15th (or April 15th if the tax burden flows through to the personal return).  To be effective, tax planning needs to be done prior to New Year’s Eve.

Use our experience in year-end tax planning to enhance your bottom line.  Give us a call if you would like to discuss your personal tax situation and see how we can save you taxes.

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week

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TMTW #162 – What Records to Keep

Posted on November 13, 2013 by taxblogger

Tax and Money Tip of the Week:
What Records Should I Keep
November 13, 2013 | No. 162

This week we will discuss a question that I get in my CPA practice a lot:
How long should I keep certain records?

Here are some recommendations:

Keep Forever:

  1. Copies of Tax Returns only
  2. W-2s and 1099 income forms
  3. Roth IRA statements(to prove that you have already paid taxes when you withdraw at retirement)
  4. Life insurance policies
  5. Birth and death certificates

Keep for 3 years:

  1. All Backup records of the latest 3 years of Federal and NC income tax returns
  2. Bank Statements, brokerage statements,  1099s, deductions, etc.

Why 3 years?

Because the statute of limitation is 3 years under which the IRS or NC Department of Revenue may change your return or you can amend your return. However, if these agencies believe that a taxpayer has underestimated their income by 25% or more, this period becomes six years.  If the IRS believes you filed a fraudulent return or did not file a return at all, there is NO statute of limitations.

Therefore, never throw away your tax return copies that we always provide you.  It is possible, but very difficult and time consuming to try to get copies from the governmental agencies of your past tax returns, especially old ones.

Also, when deciding what to store in a safety deposit box,  keep in mind when someone dies, the safe deposit box may be sealed by taxing authorities. This action may cause problems in probating and executing the will; therefore, store original copies of the will in a fireproof safe at home as well as with your attorney.

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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